How To Develop Better Financial Information - Oct 1, 2010
Posted by: Paul R. Shackford in Articles
Many small to mid-sized businesses are operating today with the basic financial information they have used for years. In many cases, the owner started with QuickBooks and used the standard template for the Income Statement (often referred to as the Profit & Loss, or P&L, statement) when setting up the accounts that would track the business. Over the years, new accounts were added as needed. And now, looking at what has evolved, the P&L has become a hodge-podge of accounts in an order that doesn’t make sense, and can’t be used to really understand the business.
In many cases, a company should make significant changes to the format and accounts they use. By setting up accounts that are really needed, and putting them in the order that will most effectively enable the owner to understand the results, the P&L can be used to determine areas to be investigated, and the owner can begin to actually manage the business.
Here are some brief pointers as to what is needed to generate the P&L you need:
Chart of Accounts. Unless you create the proper accounts needed to track every transaction, you will not be able to produce useful financial statements. For example, many companies record as one total amount the payment they make on their credit card, even though it can include expenses for purchases of inventory, travel, entertainment, supplies, contributions, and many other expenses. At the end of the year there is a large amount in the Credit Card account when there should instead be amounts in each of the individual categories.
Proper Recording in Each Account. There should be a description of what belongs in each account so that items are recorded consistently. Salaries paid to sales personnel do not belong in the same category as the salaries paid to the controller or to employees who make the company’s products or provide the company’s services. Combining all into one “Salaries” account may be simple, but it makes it impossible to properly determine gross profit, selling, and administrative expenses.
Organization of the P&L. The order of the accounts is as important as the accounts themselves.We’re wrapping up the Summer of 2010, and that means one thing. You should now begin planning your 2011 budget. While 2011 may be a better year for your business, you should not assume so without first carefully looking at your business, your competition, and your customers. At a minimum, prepare a contingency plan . . . but more about that in a future article.
The principal reason to budget is to help you focus on everything you do which can increase sales and profitability.
Here are a few suggestions of areas you should consider, a simple checklist for 2011:
1. Outsource. Look at every function that is performed and consider outsourcing to reduce costs and to improve performance.
2. Cut your personal expenditures. This action frees you up from worrying about those costs if the business is still slower than you’d like.
3. Reduce your personnel costs. Instead of hiring new full-time employees, consider part-time employees that can help with the work-load without incurring all the costs for a full-time employee.
4. Take advantage of tax incentives. If you are hiring, look into possible incentives for training and tax holidays.
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B2B CFO NAMED IN PRESTIGIOUS INC. 5000 LIST
184% Growth Earns B2B CFO Spot in the 2010 List of Fastest Growing Companies in America
Phoenix, Ariz. August 24, 2010 — B2B CFO, nation’s largest provider of CFO services to small businesses, has been named to the prestigious Inc. 5000 list of fastest growing companies in America.
Now in its 29th year, Inc. Magazine’s annual ranking judges US-based and privately held companies by their revenue growth. This year’s list was ranked on the percentage in revenue increase from 2006-2009. B2B CFO’s growth earned 84th place in its industry.
Outsourcing Important Functions In Your Company Part Ii - Jul 31, 2010
Posted by: Paul R. Shackford in Articles
In last month’s eNewsletter I wrote about outsourcing senior executive positions in your company. In this month’s edition I want to talk about a few other positions that can be outsourced.
First of all, why outsource? Isn’t it better to have an employee who only works for you, and who can spend all of his or her time concentrating on your issues?
Well, the answer is simple . . . Yes and No.
If your company requires full-time concentration in a particular area of importance to the company, it might be best to have a full-time individual be your employee. Perhaps the most common function in a company is sales. Not much else happens in a company without someone bringing in new business, and then spending time with existing customers to retain them and expand your relationship. The owner is often the first salesperson and, when another salesperson is added, the owner tends to spend more time managing that new individual. As sales grow, more salespeople are added, and you may even need to add a sales manager.
The finance area is another department that tends to have a number of full-time employees. As the company grows, however, it often makes sense to outsource some of the functions normally handled by Finance.
The most common function outsourced is payroll. You would be amazed at how many companies, though, still process payroll in-house. The reasons most often given for processing payroll in-house are confidentiality and cost: “I don’t want everyone knowing how much others make” and “It only takes me an hour or two a week to do this, so why should I pay anyone to do it?”
Well, you are either paying someone to handle the payroll or – worse yet – you are doing it yourself. What a waste of time and effort! When you add in the quarterly and annual reporting to your state and the federal government, you are spending more time than you think. The benefit of an outside payroll service is that they process the payroll and all of the taxes, filing reports as nee....
Posted by: Paul R. Shackford in Articles
Outsourcing Senior Executive Positions In Your Company 1199 - Jul 15, 2010
The first question is this: Why Do I Need to Outsource Anything?
Now, that’s a good question. After all, you’re probably an entrepreneur and, as such, you’re a successful individual who can handle many different aspects of the company. You came up with the initial concept of your company, right? And you built it from the ground up, I’ll bet. You’re also the best salesperson for the company, too – sure, you finally had to hire a salesperson, but you may feel that no one is as good at selling at the owner (and you may be right).
But, at some point, you have found (or, trust me, you will find) that you don’t have your finger on everything in the company. The first time you’ll see this is when your employees cannot create or manufacture the product or provide the service that you wish they could. It’s just not the way you would do it. You may very well step in . . . you know, to demonstrate how it should be done.
And, later, you’ll look at the financial results and wonder why you don’t have the results you thought you had. This will often come when your outside CPA prepares the tax return. And sooner or later you will say to yourself, “Why didn’t I know this sooner?” or “Wasn’t there anything I could have done to improve my results?” That Eureka! moment.
If this sounds like you, it’s time to step back and understand that, yes, you could have known your results sooner, and you could have done something to improve those results.
But unless your company is the real exception, you simply don’t have the expertise within your company to help you help you get that information.
Your bookkeeper or controller has enough to do just to pay the bills and send out your invoices, to collect the receivables, get the employees paid . . . and just simply doesn’t have the time to prepare monthly financial statements.
Now that Fall is here, many of us get calls from our CPA to talk about year-end tax planning. Should we try to move income items to next year? Can we make some expenditure this year to reduce our taxable income? Have we funded our retirement accounts? Many questions should be considered to help better plan for the inevitable end of the year.
But this is also a time to consider the impact of the end of the year on your company’s financial position, above and beyond the necessary tax planning.
In many cases, companies must issue and distribute annual financial statements to various outside parties: banks, lenders, partners, and other stakeholders. But the annual statements are important for management of the company as well. As such, this is the perfect time to do some planning regarding how the company’s annual financial statements will look.
The annual review should really begin now . . . using the latest interim set of financial statements as a starting point.
The Company’s Annual Financial Statements
Every company needs to prepare a complete set of annual financial statements. Some companies prepare them quarterly or monthly—all successful companies do the latter. But it is critical that these statements be completed on an annual basis.
The most effective and complete set of financial statements will, of course, include comparative balance sheets, statements of income, and statements of cash flow. If your company will be audited, you’ll also need footnotes. But even if the company is not required to do so, I highly recommend that footnotes also be prepared. The notes need not be as complete as those required for an audit, but they should include information that outlines commitments, management estimates, contingencies, fixed assets, benefit and health care obligations, and so on.
Why Prepare This Detail? The purpose of these notes is to focus management’s attention on the details that may not show up when simply looking at the balance sheet. Read more...
When Inventory Is Not An Asset - Aug 29, 2009
Posted by: Paul R. Shackford in Articles
I mentioned to an owner of a business a while ago that inventory is not an asset. She looked at me and probably wondered if I knew what I was talking about.
"I'm not an accountant," she said, "but I do know that inventory is an asset. It's even shown as a current asset on my balance sheet, I sell it to my customers to get the cash, and I couldn't run my business without it. How can you say that inventory is not an asset?"
She is right, of course. But what she and most other owners don't focus on is that inventory can just as easily be a liability to a company unless the company is very careful to ensure they get the most out of the inventory.
In fact, an owner should look on every piece of inventory as a liability until that inventory is sold and it becomes a receivable. Until that point, every dollar invested in inventory is a dollar the company cannot use elsewhere in the business.
Inventory is insidious in that it often, slowly, consumes a lot of the resources of a company. Of course, most companies do need a certain level of inventory in order to meet the demands of customers. But it warrants careful and ongoing attention.
- In most cases, inventory is purchased and paid for long before it is sold to a customer.
- For some period of time it sits in a warehouse, and the cost of carrying that inventory (i.e., interest expense) reduces the company's profits.
- Moving the inventory always raises the possibility of damage, but some inventory will diminish in value just sitting there.
- A rule of thumb: The more inventory you have, the more will "disappear." That costs the company more money.
- Maintaining large levels of inventory requires people to manage it, adding wages, benefits and other costs.
So a company should look carefully at every dollar it invests in this "asset." To do so, the company needs to understand what they have, and why they have it. The company must be sure it has the right information:
- Routinely prepare and review detailed reports about the inventory. How much do we have? What kind of inventory is it (finished goods, raw materials, work-in-process, or other categories)? How much of each type?
- How often does the finished good turnover? What are sales of the finished goods, and what level of sales are expected in the near future? Based on that forecast, is there too much inventory on hand?
- Categorize inventory, based on turnover and expected sales, into A, B and C items, with A being the "best" or fastest moving, and C being the slowest moving.
- Identify inventory, including the C items, which the company does not expect to sell in sufficient quantities over a short period of the future.
- Identify a plan to dispose of slow-moving or unneeded inventory.
With regards to the last point about slow-moving inventory . . . at some point, goods will be identified that need to be sold at lower prices than in the past. If there is no longer a market for those goods, or if the company has decided to discontinue selling those products, there is no reason to hold on any longer. The goods need to be sold or, if necessary, discarded. This is not a time to worry about the impact on the company's income statement. At this point, it is a balance sheet and cash issue, and every dollar received from selling that inventory is a dollar of cash in the company's bank account. And the other costs—the carrying costs noted above—can be reduced at the same time.
So, when is inventory NOT an asset? When the company is not selling it quickly. Otherwise it is an expensive liability. Spending time actively managing inventory will reap rewards—cash rewards. And remember—cash IS ALWAYS an asset.
A Middle Of The Year Business Plan - Jun 30, 2009
Posted by: Paul R. Shackford in Articles
The likelihood of a large company not having an annual budget and business plan is fairly remote. In fact, companies that have annual business plans generally complete them toward the end of a year to reflect their expectations for the following fiscal year . . . and then they judge their progress against what they had originally expected.
On the other hand, many owners of small to mid-sized businesses do not routinely create a budget, let alone a business plan. Why, then, consider a mid-year plan?
First, let's understand the terminology here.
Budgets and Business Plans
A budget entails projecting for a period of time, normally one or more years, the estimated income and expenses for the business, the cash flow for that period, and other key financial information (balance sheet, capital expenditures, financing options, and so on). A company cannot prepare a budget without considering the results from the recent past, current operations, and its expectations of the future.
A business plan includes the budget, but is more comprehensive. The business plan includes more information regarding the company, the competition it faces, the markets it serves, and the basis of its assumptions and projections. But, importantly, a business plan also includes how the company will be affected if its assumptions do not actually happen, and what will be done in such cases.
Using the Business Plan to Focus the Company
In most cases, a business plan is prepared when a company is seeking financing from a bank or other lender, or is seeking to issue debt or equity. Stakeholders want to understand the company's history and its expectations, and the thinking underlying those assumptions. In fact, the assumptions and management's plans are as important as the actual financial projections, if not more so.
But, particularly in these uncertain economic times, most companies could significantly benefit by preparing a full business plan, and challenging itself to identifying things that could go wrong and how the company would react to those events. It is the process itself which helps the company and its management focus its attention on opportunities and risks.
There are fairly standard formats for a business plan. For example, they always start with an Executive Summary. But the point here is to use the model of preparing a business plan to enable a company to better understand the factors that affect the company, and to provide the rigor of identifying how the company would react to changes to its plans.
The Critical Elements of the Business Plan - The Market
One key element is a description and analysis of the market that affects the company. This needs to be an honest, critical description and analysis. It is not helpful to say that the company plans to make and sell a new type of widget in the United States, that there are 304 million people in the United States, and that the company expects to sell a widget to a certain percentage of that population. The point is that the market for a company must be very specific, and there needs to be evidence that the market does indeed need the widget. Can the company clearly define the problem-the pain-that the new widget will solve? Why does the market need the widget? If the economy continues to be soft, will people defer buying the widget, even if it does solve relieve of that pain?
Evidence is critical, and that is best obtained by interviewing intended customers, surveys, and so on. A company can hope many things, but it is most important that intended customers provide feedback and information to validate the plans. The world is littered with widgets that no one has bought.
Does the company intend to sell its existing products into a new market? What has the company done to be sure that the products meet a need in that new market? People dress differently in different regions, they eat different food, and they buy different necessities. So why should a company assume that other people in different areas or markets will actually want the product? Again, the company's assumptions need to be supported by some kind of third-party evidence.
Another Critical Element - Costs and Selling Prices
Another element relates to the cost to produce the widget. Has this widget ever been manufactured? Tested? In realistic quantities? Will the company manufacture it, or will it be produced by others? Is there real evidence that it can be manufactured at a reasonable cost? Are there realistic alternate suppliers? What if the principal supplier can no longer provide the product-for whatever reason?
Ho....
Radio Interview Consult A CFO - May 31, 2009
Posted by: Paul R. Shackford in Success Stories
I was just interviewed by Barbara Weltman on her WSRadio.com Building Your Business radio show. You can listen to it by clicking here; listen to both Segments 03 and 04 for the full interview.
And, while you're at that site, take a look at other archived radio interviews Barbara has conducted. She's an expert on small business, and you're sure to find interesting interviews.
Time To Look Closely At All Your Expenses - May 15, 2009
Posted by: Paul R. Shackford in Articles
As we all know, we have entered into a very disruptive time in our economy. There is more uncertainty now than we have experienced in many, many years. The only thing we really know is that, even if the economy stabilizes fairly quickly, there will be an impact on business for some period of time.
Prior to my becoming a partner with B2B CFO®, I started and ran a business in the printing/copying industry. I began the serious planning for starting this business during 2000 and, by the end of the summer of 2001, I had my financing in place, leased the space, begun the build-out, and had hired employees. Everything was in place to open in November.
And then 9/11 occurred.
I decided that I would continue with my plans to open, and did so just before Thanksgiving 2001. And, the opening went well.
But, the impact of 9/11 was far-reaching; companies – small, mid-sized, and large – reduced their marketing plans, their training programs and their workforces. In essence, they did whatever they could do to reduce their expenses to protect themselves. Looking back, this “holding back” lasted from 18 months to over two years, depending on the company.
I think we are in a very similar place right now.
So, what should you do right now?
The first thing to do is look at your expenses, and determine if this is the time to either cut those expenses or at least be prepared to “pull the trigger” on short notice if you need to do so.
The Nature of Expenses
Some expenses are discretionary and some are non-discretionary, at least in the near-term. Building rent and business insurance are probably non-discretionary, and you may not be in a position to change those payments. But difficult times call for extraordinary steps, and it may be just the right time to meet with your landlord to discuss possible options, including reducing your current rental payments or moving some of them to later periods to conserve cash flow. Particularly in this market, and if you are getting close to the end of the lease term, you may find that your landlord is willing to talk.
It is also in order to meet with your insurance broker to look at your coverage and determine if there should be changes that will reduce your cost. While a certain base level of insurance is needed, there may be some flexibility in terms of deductibles and types of coverage that could lead to a reduction in your costs. You may want to look into having multiple insurers bid on providing renewal coverage.
Cash is King to your suppliers. Talk with them about the opportunity to receive discounts for your prompt payment of invoices.
Cash is also King to you. Be sure to speak with customers before your invoices are due, and be sure that you are on the top of their list of vendors to pay.
Talk with your bank about “remote deposit capture” and stop putting off going to the bank to make those “small” deposits—with this feature, you deposit your checks each day, without ever leaving your office.
Take a close look at what you are spending for your technology infrastructure. With one client, we added up the real costs of occasionally using an outside consultant, and the true cost of an employee who was expected to spend a quarter of his time in this area (but was really spending close to 75%). By outsourcing these functions, and paying the full year fee up-front in return for getting 13 months of service, we actually reduced our overall IT costs and have a much better IT system in place.
Marketing expenses need to be examined. A general rule of thumb is that you have to “touch” your prospects five to seven times before they think of you when it’s time to consider buying your product. A cost-effective way to “touch” prospects is instituting a well-planned email-marketing program. You can easily reach people, professionally and routinely, to keep your company in front of them.
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These are just a few of the many expenses and opportunities you need to consider. While it’s always critical to understand the expenses that you incur, now is the best time to do so. You will probably be surprised at how much you can save by taking a close look at what you spend.
What The Owner Should Be Doing To Weather The Economic Storm - Mar 31, 2009
Posted by: Paul R. Shackford in Articles
Anyone who starts a business is hoping to ultimately reap the rewards of ownership: the excitement of building a business, compensation commensurate with the risk, and an exit from the business that allows for the owner to enjoy a better life.
But today, with an increasingly difficult economy, there are more and more pressures. Good times allow us to mask average or poor results . . . times like these not only expose them more quickly, they demand action in order to survive. As difficult as it is to start and grow the business, it’s more difficult to manage it as it faces difficulties as we do today.
What Should the Owner Do?
The problem is that the skills and information that are needed when a business starts up, or as its sales increase, are often insufficient when the company reaches The Danger Zone – the period when the cash needs of the company greatly and consistently exceed the sales of the company.
This happens for many reasons:
• Customers reduce the amount they buy, or press for lower pricing and extended payment terms
• The time period it takes to collect receivables lengthens
• Cash is invested in human resources (more people, bonus plans, increased benefits needed to attract good employees) and to build the business (higher levels of inventory are needed, more is spent on machinery, computers, and software)
And the need for more accurate and useful information is critical. It requires a better understanding of the past as well as a vision for the future. Historical financial reports provide a baseline for the future, and should be used to identify the profitability of products, the activities that drive a business and its cash flow, the key performance indicators, and areas for improvements and cost reductions.
But historical information is not enough. The owner needs information that can help identify future paths and plans. New tools are needed: not just the annual budget, but also ongoing forecasts of sales and expenses; projections of cash flow in order to identify future needs; and “flash” reports so that the owner has the information on a timely basis.
The solution is to wrench the system into a position where the owner is not doing the work of others in the company. The owner has to do what only the owner can do:
• Rely on someone else to do the analysis work, someone who is good at it and whom the owner can trust, and work closely with that person
• Spend more time finding new customers
• Refocus on the market and products/services that the company sells
• Have a system created that will provide meaningful information, financial and otherwise
Owning and running a business are always difficult tasks. But we find ourselves now at a particularly stressful time. The owner must have the right organization and resources in order to continue to operate the business, make it lean and efficient, and weather the current economic storm. The owner needs first to understand that there are things that only the owner can do (and things that the owner should not do) and then focus on taking those actions. This will most often require the owner to identify the correct supporting resources—inside or outside the company—that can work closely and effectively with the owner. Only when that is clearly understood can a company be effectively managed.
How Is B2B CFO Different From Other Solutions - Feb 9, 2009
Posted by: Paul R. Shackford in Articles
“What’s the difference between a B2B CFO® and other temporary or interim consultants?” This question is often raised by prospective clients, bankers, CPAs, attorneys, and others.
Since there are significant differences, I am happy to talk with people about them.
First of all, the goal of a B2B CFO® partner is to be a long-term, part-time solution, whereas virtually all others approach this work at a short-term, full-time solution.
Our model has us spending time with our clients to work on issues we both agree need to be addressed first, and then our time tends to decrease as we assist the client’s staff to be more efficient and effective, and we work closely with the CEO as a long-term, trusted business advisor.
We also work on a handshake basis, whereas most others begin working after signing a contract with the client.
We have no hidden fees. We agree up-front with our clients on the amount that we will bill and we don’t exceed that without a clear understanding that the client wishes to increase the amount of time. Others have early termination fees or other charges.
Our focus is on small to mid-sized businesses; our competitors tend to prefer larger clients.
We are a partnership of senior financial executives, and provide advice in that capacity. We are not interested in becoming an employee of our clients.
Ultimately, each partner is essentially working toward building a long-term practice similar to that of a CPA or law firm, where we have a roster of satisfied clients. We are not looking to simply be a temporary solution or a project-based consultant.
Since our goal is to be a company’s long-term advisor, we genuinely care about the success our clients achieve. This, as much as anything, sets us apart from other providers.
Did You Know You Can Outsource The Expertise Of A CFO. - Jan 29, 2009
Posted by: Paul R. Shackford in Articles
It's not unusual for small to mid-sized firms to have sophisticated operations and complex cost and financial challenges-just like large companies. As an owner or CEO of a company, have you ever come to the conclusion that what you really need is the advice of a CFO? You are not alone.
And you perhaps are doing what many owners do . . . you try to handle it yourself.
Click http://www.b2bcfo.com/partner/pshackford/Paramus%20Chamber%20Winter%202008%20Article.pdf for the rest of the article recently published in Paramus, the magazine of the Paramus (NJ) Chamber of Commerce.
Interview On Wsradio - Oct 22, 2008
Posted by: Paul R. Shackford in Success Stories
I was recently interviewed by Barbara Weltman on her Build Your Business radio show.
We spoke about a wide range of issues facing small to mid-sized businesses, and why it is particularly important that owners have someone who can provide senior level financial advice to them.
You can listen to the interview by clicking here.
The interview is in two segments, and each is about ten minutes long.
Outsourcing A CFO - Sep 23, 2008
Posted by: Paul R. Shackford in Articles
Every Company Needs a CFO
Companies without a CFO are at a competitive disadvantage. Many start-ups, small, and mid-sized firms have sophisticated operations and complex cost and financial challenges like large companies, only on a smaller scale. They need the expertise of a senior financial executive, but they either do not need a CFO on a full-time basis or they cannot afford the cost of a full-time CFO.
All highly successful businesses have one factor in common--they require timely, accurate, and useful information. Are your internal financial statements error-free? Do you receive your financials by the tenth day of the month? Are you confident that you do not have employee theft of cash, time, or inventory? If you are unsure of the answer to any of these questions, you need the assistance of a Chief Financial Officer.
Many companies get to a point in their business growth that requires the assistance of a high level financial professional, but hiring a full-time CFO may not always make economic sense. Outsourcing this function is an alternative to hiring another full-time employee with all of the costs that go along with employment, such as payroll taxes and benefits, as well as the costs for a search for a qualified person. The benefits will far exceed the cost.
Advantages of Outsourcing CFOs
More time to spend with customers. Entrepreneurs generally don't enjoy spending time with accounting and HR functions. Competitive companies must spend the vast majority of their time with current and future customers. It's one of those business facts of life--someone is spending time with your customers and prospects today; if it's not you, then it's your competition.
Better financial information for key decision-making. Most closely-held companies have erroneous financial statements. A business owner can't make key business decisions while relying on bad, inaccurate, or incomplete data. How confident are you that your bookkeeper/controller understands modern accounting standards, and how to present core profitability information to help you make the right choices?
A theft deterrent. Owners would be shocked to see how many employees steal from employers. There is theft of money, inventory, customer lists, intellectual property and other company assets. A part-time CFO will not only establish tighter controls, but the presence of the CFO can also help to discourage dishonesty by company employees.
More money from the bank and from vendors. Bankers and vendors are more sophisticated than ever. It's not long ago that many banks would make loans to small businesses without requiring that companies provide routine financial statements, but those days are gone. They are looking for financial statements that look professional, that follow accepted accounting principles, and that easily highlight the company's key ratios. A part-time CFO can improve your company's external "image" and assist the owner with opening doors to banks and obtaining better vendor terms.
Better trained accounting staff. Turnover in accounting staff is high. A part-time CFO will mentor and train your accounting staff to do a better job by acquiring more knowledge of accounting procedures.
Better documentation and controls. Does your bookkeeper/controller make tasks into a secret monthly ritual, being proud of being the only person who knows how to do something? Does that make you uncomfortable? A part-time CFO will establish proper controls and best practices, and help outsource high risk, low value tasks to protect your company.
Fewer cash flow surprises. Many smaller companies exist from month to month, paying vendors on the "squeaky wheel" principal. This is simply a symptom of a lack of planning. Difficult cash flow issues can be reduced by planning, cash flow management, and securing the financing you need to grow.
No surprises on tax payments. A part-time CFO will work directly with your regular tax CPA and provide them better financial information, so that you can better utilize your CPA's skills and advice.
Some Things to Consider
When considering out-sourcing a CFO, look for a professional with 25 or more years of experience. In finding someone with this experience level, it is highly unlikely that a problem or issue will come up that can't be resolved.
Make sure the part-time CFO is supported by a national organization that has the resources to be able to give your part-time CFO the support they need.
<....Top 5 Cash Flow Rules For Owners CEOs - Sep 16, 2008
Posted by: Paul R. Shackford in Articles
* When it comes to cash flow, there's no time for a Top 10 list!
Why do you need to concentrate on Cash Flow? Simply put, especially for a small to mid-sized business, cash flow equals life, growth, prosperity . . . and survival.
You, as the Owner or CEO of the business, need to free yourself to focus your unique talents and abilities on growing your business rather than fighting the constant cash flow fires. Remember . . . you are the only one who really cares about the ongoing viability of your company. It's your future that you are most concerned about but, if your company is not successful, none of your employees will have a job.
Here are the Top 5 Cash Flow Rules you can implement immediately that will transform the way you manage your business from this point forward. But first, remember the two cardinal rules of managing a business:
- Never run out of cash. Make the commitment to do what it takes so that it does not happen to you.
- Cash Is King. Cash is what keeps your business alive. Manage it with the attention it deserves. Without cash, you have no business.
Now, the Top 5 Cash Flow Rules . . .
Rule #1: Know the cash balance right now. Even the most intelligent and experienced person will fail if business decisions are being made using inaccurate or incomplete cash balances.
Rule #2: Do today's work today. The key to keeping an accurate cash balance in your accounting system is to do today's work today. When you do this, you will have the numbers you need--when you need them.
Rule #3: Either you do the work or have someone else do it. Those are the only two choices you have. The work must be done. So, either you do it or have someone else do it. (See Rule 3a.)
Rule #3a: If you are doing the work of determining the cash balance, you may not have the right people working for you. Unless you are a start-up business without any accounting staff, you must be sure that the financial people know that you need and demand that they focus their efforts on monitoring the cash balance, and keep you aware of what's happening with your cash.
Rule #4: You absolutely, positively must have cash flow projections. Cash flow projections are the key to make wise and profitable business decisions. It's impossible to run your business properly without them.
Rule #5: Eliminate your cash flow worries so you are free to do what you do best--take care of customers and make more money. This is the real key to your success in business. The reason you have to make sure you have the cash flow of your business under control is so that you are free to focus all your time and talents where you can make the most difference in your business.
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B2B CFO® specializes in helping business owners and CEOs manage their cash flow. Give me a call (at 551 486-4381) for a no-cost / no-obligation Phase I analysis of your business. It's a call worth making.
Testimonial - 236 - Sep 16, 2008
Posted by: Paul R. Shackford in Testimonials
"I recently introduced Paul to a new client of mine. Their Finance Department was run by someone who needed help to get out of the mess. He has been able to bring order out of chaos and get the Finance Department moving in the right direction. Reports are accurate and useful. The Board is thrilled. The work is organized and effective. I would recommend Paul to anyone."
Greg Chartier, PhD, Owner, The Office of Gregory J Chartier
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B2B CFO Partners, LLC dba B2B CFO®
(877) 4-B2BCFO
2415 E. Camelback Rd, Suite 700
Phoenix, AZ 85016
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